Alternatives To 'Key Money' In Hotel Management Agreements

By
Ronald KornreichDecember 6, 2017, 3:32 PM EST

Law360, New York (December 6, 2017, 3:32 PM EST) -- The competition for branded hotel operators to secure long-term management agreements can be fierce, even with the recent consolidation in the hotel sector. Savvy hotel owners and developers often engage in a competitive bid process (e.g., seeking RFPs) and weigh not only the name recognition, reputation and quality of the brands but also the financial incentives they may be willing to offer.

Often the financial incentive takes the form of “key money” — where the operator contributes cash to the hotel owner in exchange for a...